Merkel's reform contracts pushed back until October

The German idea of binding economic reform contracts in return for yet-undefined funding has been pushed back until October 2014, as other EU leaders either opposed or did not fully understand the concept.

"I am convinced that more economic coordination is important for the markets. It's about the credibility of the eurozone. We discussed it a lot, but to be honest there is still more work to be done on this," Chancellor Angela Merkel said in a press conference after the first EU summit day in Brussels.

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She said the delay until October was mainly due to the EU elections taking place in May - as an initial plan was to reach an agreement by June.

"I suggested we then postpone it until December 2014, but the presidents of the EU commission and the EU council said they still wanted to get it done during their term. There was a strong support to do it by October," Merkel said.

She admitted it was not easy to convince her peers of the necessity for more economic coordination, as the link between economic reforms and national borrowing costs was not as direct as with public deficits or the situation of a country's banking sector.

"I am happy to continue the discussion. We will advance millimetre by millimetre," Merkel said.

Germany has already got what it wanted with a fiscal compact and more scrutiny for the EU commission on national budgets and reforms. But many of the EU commission's recommendations remain on paper and Merkel wants to see more "ownership" of reforms.

"The word 'voluntarily' was eliminated from the final conclusions. Just to give you an idea how the discussions went," Merkel noted.

According to an EU source close to the leaders' talks, there were three groups of countries: the ones in favour - notably Germany, the ones opposing - Netherlands for not wanting to pay for more "solidarity mechanisms" and Belgium for being dissatisfied with how little "solidarity" there was.

"The bigger group was the one of countries who were not necessarily against, but were asking for more details. Which is fair, because the part on the contracts is clear, but what is less clear is how the solidarity mechanism will work," the source said.

What was clear was rather what the solidarity mechanism will not be: not the EU budget, not a special budget for the Eurozone or eurobonds.

"It could be a loan, grants or guarantees, but we need to explore this more," the source said.

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